it is next and this time i'll get off sits down with richard jones deputy executive director of the international energy agency to discuss the decrease of the planet's oil reserves and what it means for the future of mankind. hello again or welcome to spotlight share on our team i'm al green of in today my guest on the show richard. according to the international energy agency the surging and richard the one who will most likely lead the world to a dive. called reserves are running out faster than expected and the growing fuel consumption raises environmental concerns but this all the warnings people continue burning oil and oil promising alternative energy sector is still unsufficient be

developed so what's to be done to avoid that future without dramatically changing our way of living and maybe russia could help with that we're asking is the deputy executive director of the international energy agency. the international energy agency says the world is entering big golden age of gas with production to rise by fifty percent in the next twenty years russia's going to sheeple were hundred and ten billion cubic meters of gas to europe through its south and north stream pipelines the construction of south stream is starting suit and old stream will start operating in early november the trans underneath the baltic sea and delivers russian gas directly to western europe this is meant to improve european energy security and weaken its dependence on transit countries.

to walk into the show thank you for having me thank you thank you very much for being for being here well. the international energy agency the i.a.e.a. has signed a new car pray shin agreements with russia one. you in these it weakness can explain in a couple what it's. it's it's a good question but. basically we're continuing the evolution of our cooperation which has gone on for many years but in particular the focus in upcoming will be more and more on energy efficiency which is a very important objective for russia not only will it allow russia to adopt new more modern technologies will be and benefit for economic growth in russia it will give you more resources to add to your exports so i think it will be a win win for russia and for the international community because greater supplies of russian oil and gas will mean greater energy security for the rest of the world

well we like talking about image of security security. especially of demand but also security of supply there anyway when we talk security of supply security of the moment we mean that there is a contradiction between the consumers and the suppliers do these new agreements at least try try to to overcome these countries yes in a way because one of the main components of the agreements is that we work more closely together and we figure we can learn from each other particularly in improving our market forecasts and this year's world energy outlook which is coming out in just a few days now in fact our executive director will be in moscow on the eleventh of november to present it just two days after that after the worldwide launch. it benefits greatly from cooperation with russian experts we did a special chapter president actually special section focusing on russia and in preparing that i mean the judgments are all our own they have to be but in

preparing that to that section we relied very much on conversations with the russian officials and executives from a variety of private companies as. well in russia richard since you've mentioned the forecasts well according to one of your forecasts of the i.a.e.a. i quote despite concerns about the state of the world economy while demand will rise by one point three million barrels to ninety point five million barrels a day in two thousand and twelve next year what keeps the demand so high despite what's happening in the world the simpler answer is that there is a crisis in part of the world and the other part of the world that continues to grow and the part of the world is continuing to grow has a high marginal demand for oil products so oil is continuing to grow and why is that because they're getting rich enough to buy cars in china and india and so it's transportation in those two countries which is

a major part of the incremental demand in fact in o.e.c.d. countries the developed world where there is an economic crisis you may actually see declines in the use of oil and consumers in any young growing economies they like they. have very gaskins you make. them think about savings and we just hope that if they buy more efficient cars that at this stage in their development in our country this is not available what so do the forecast for for oil prices in the we know we don't we don't we don't forecast. we what we do is we base our projections for short term prices we use basically the future price that's available in the market we just assume that the that the people that are in the financial markets know better than we do what the price might be in the future and so we just use the future strip as we call it the different prices for different time periods as as the word our working assumption on prices and then we figure out supply and demand

from that rather than trying to forecast price well let's talk about libya libya produced one point six million barrels of oil a day right now production fell dramatically because of those civil war everything ready to come. words to only ten thousand a day ten thousand barrels a day which is the if i'm not mistaken the figure from last month what does it mean for the world market baby because libya where what was a considerable source of fuel was i mean the problem with oil of course is that it's a very inelastic fuel price in alaska the his low so small changes in supply mean big changes in price and that's basically what we saw in that period and because of that one point six million barrel a day shortfall in libyan production and most libyan production was exported so by about a shortfall of one and a half million barrels a day on the world markets will want it and especially if it's because the issue of

the shortage was prolonged i mean it really libyan exports went to about zero in march and so that's now been you know we're going on seven months now and they're recovering a little bit they'll be able to hire this month and by the end of the year they could be between four hundred six hundred thousand barrels a day but even by june we estimated that over one hundred thirty million barrels have been taken out of the market and that has to come from somewhere either in either it comes from from a declining stocks either commercial stocks or government stocks or it means demand is lower than it would have been otherwise and why is that because the tightening of the market raises the price and so the price means some some people that would have bought oil by less oil. wealth ok but i don't know if it's savings if you're going without it does that mean it may mean lower economic oh no but nobody's nobody even considering of trying to use to teach you cruisers really what we did use them i mean we used them in june and. we think that that present prevented

a price spike at the time because it helped to supply the market we really sixty million barrels. thirty eight million barrels a day. it was from government strategic stocks twenty two million barrels was released by allowing companies to hold less stocks companies have a kind of like a bank has a reserve requirement companies sometimes are required by governments to hold stocks so release those we relax those requirements some countries did and other countries sold oil into the market out of their strategic stocks and that that release was very well received by the market more than thirty more than ninety seven percent of the thirty eight million barrels that was offered from strategic stocks was picked up by the market and by the way that oil was sold at market prices so we weren't trying to undercut the market we were just trying to supply the market at the prevailing price well you mentioned that libya is still

a thing to regain its previous production but now it's ten thousand took maybe that fifty thousand all know five hundred thousand five hundred thousand not one point six million. so how long will it take libya to to regain its one point six is the possibility is what it's right and should do yeah well nobody's short answer is nobody knows and then of what we've been saying is it will take many months and even but they did destroy the industry i mean it's no but there is some damage there is some damage and it has to be recovered and oil fields you know they can be damaged. you know just if they're neglected so you know the damage needs to be assessed to the infrastructure to the fields i'm cautiously optimistic that to the oil fields could come back on. by the end of next year but i don't want to make any such predictions simply because we just don't have enough information

at this time so if it's going to take a while and one of the reasons why we now think we can get by with lower amounts is because it is ramping up a little bit also there were some other small outages around the world that have now. and corrected but the main reason is that demand is weaker than we thought it was economic forecasts are going down and so we are and we're not the only ones forecasters around the world are revising downward their assumptions or their forecasts for demand not only for this year but for two thousand and twelve as well so we think the market will stay in relative balance but. it's it's not going to be a good. year for the for the oil industry i think well actually if we talk in general about the arab spring it certainly. was welcomed by politicians in the major democracies we saw hillary clinton out amused she was when

she saw the picture. are the lasts arab dictator the being massacred in yeah they live they haven't the other day but they will work it wasn't so much happy about the arab spring was it well it did disrupt the markets and but you know markets can be disrupted in many ways and. you never know where it's going to come from i mean the last time we use stocks it was because of a hurricane. you know the first time we use stocks it was because of international aggression this was because of civil civil dispute. in nigeria they've had a lot of problems with sabotage the pipelines of people trying to steal the oil. and it's also related with with civil problems there so there's there's just you never know where it's coming from but you do you need to always be. on guard for these kinds of disruptions and that's that's one of the reasons that the i.a.e.a. was created says richard jeni that to take that he did director of the

international panel gee thanks spotlight we'll be back shortly to take a break so stay with us. i i. i i. i. i.

just. keep the. peace. welcome back to spotlight i'm album love and just a reminder that my guest on the show today is richard jenkins deputy executive

director of the international energy agency richard roth let's talk about about russia's policy well there's lots of talk about the red direction gradual red direction russian crude. crude flows from from the west towards asia and first of all to china how was it seen in the west could it be a reason for for a clash of interests between russia and the west china and the west no i really don't think so and the simple reason is that it's a global market these days the oil market is. worldwide and. china is where the action is that's where they're growing in consumption china and india are the two primary and the middle east with course they have their own oil so i think it's fully understandable in fact we we anticipate that always city or oil demand will actually decline so it's a natural process china has the demand they're willing to pay the price as they get the oil according to the latest. report i quote the world faces

a dire future unless a complete change of course is made to deal with the huge problem of surging energy demand and quit what does the are you a suggests doing in the one to two avoids the future well i mean you're talking about a dire future in the in the event of surging demand for fossil fuels i mean energy is life as population increases economic activity increases and even though we all hope that our ability to use our energy efficiently improves over time we know that rising a rising population as long as that happens means there's going to be rising energy demand the key question is how we supply satisfy that demand right now our energy mix in all countries or almost all countries is heavily focused on fossil fuels and the concern there is that fossil fuels are first of all they're there are supplies

limited nobody knows so when will run out but everybody knows that it's a fossil resource and therefore is limited in supply it took millions of years to create the oil and it's going to go away and in hundreds of years so it'll it. in someday also it's a dirty fuel. production of oil and gas can be dirty consumption of it is certainly dirty in terms of normal air pollution but particularly i think what we're warning about in that particular passage is that it is the prospect of climate change well speaking about again as well actually specialists specially the russian people from gazprom they say that they of course say that again as is more climate friendly than or oil. production and consumption of gas so the i.a.e.a. also says i quoted that the world was potentially entering a golden age of dance with production set to increased by over fifty percent by

twenty thirty five well do you think that that really get us is going to replace oil in the end it will be good for you for a climate for the climate and gas competes more more properly actually with coal than with and then with oil because because gas is used for power generation and in industry and those in those uses it is cleaner than complete it's much cleaner than coal and not only in terms of the normal air pollution that you think of but in in the key area of emissions of carbon dioxide. natural gas and it's far less about half as much by energy value as cold us so it is a much cleaner fuel than than coal and we sometimes talk of natural gas as a bridge bridging fuel because it can help us while we're still dependent on fossil fuels reduce emissions until we're we have the capability of rely more on the advanced technologies a renewable sources of energy and so on that are that are not admitting at all but

. we we can't rely on on natural gas indefinitely because even natural gas doesn't meet some c o two and so over time our energy demand will grow to the point where. even natural gas could lead to global warming and that's why we talk about it as a transition for you why i mention this quote from the i.a.e.a. report is that. we get an impression that he really remains rather skeptical about such things as that is as the renewable sources of energy this is why you're defending them guess the only forecasts all based on and on they exist is well first of all there are scenarios and this scenario has certain certain assumptions and one of the assumptions is that to consumers will welcome gas and that's that's very important right now gas is undergoing a renaissance because the prices come down but is demand increases the price will also increase and there then they'll be a rebalancing of markets so. you know we're it's not that we're skeptical of

renewables it's that we just do the arithmetic we recognize the many countries particularly in western europe but other countries around the world including china have have targets for instance expansion of their renewable industries we feel that they are committed to honestly committed to honoring those targets in they'll do so but we also know that there's a tremendous amount of investment in the existing system and and no country is going to give up that capital stock before it's time it would just be you know none of us are rich enough that we can afford just to throw away perfectly good equipment and that's one of the reasons that we sometimes worry about what we called technical or technology lock in that if that the coal plants built today will be around for fifty years and so that's why we think it's very important for countries that are serious about this to to. begin to actively support the

expansion renewables but we just look at at the size of the industry and the amount to the bottlenecks that exist and we figure that it would be very good if you knew . to expand say at an average rate of ten percent a year and given the small role they play now that means it's going to take a long time before they dissipate place fossil fuels it's just a riveting well very soon the very eight that she leave let it be putin will be so the brits and the launching of this i think his favorite project the north stream project which will unload the first gas supply from russia. underneath the baltic sea so to germany and you know that this is this is really a great project well what do you think is the prevailing the prevailing sentiment in you is sentiment in europe because on the one hand people want to once interrupted supply from a steady supply to be sure in the supply but on the other hand they are worried

about the growing dependency on russian gas s.s.o. which we said we will be probably one evening well i think i think you catch it very well. they appreciate russia as a supplier i think most europeans think that russia's been a reliable supplier over the years in recent years there because of the. issues with ukraine there's been some nervousness and but i think anybody who looks at the at the data will realize that yes russia is dependent on mean yes europe is dependent on russia for supply russia is also dependent upon europe for demand cash yeah and in fact russia has a smaller share of the european market then europe has of russia's exports so you can say that russia is more dependent on europe than europe is dependent on russia except that the one forgoes money if it doesn't make the sale the other work for

goes heat in the winter time you'd rather have heat than money so the important thing though is that they have to work together. you know no no commercial. transaction takes place and. less it's beneficial for both the buyer in the cellar and that's the key well i guess most of the people especially the politicians the businessmen in you know they understand that what you say is that is that in case of mutual dependency you read dependency is just half of the problem you're part of is the better than thinks there's the other half of that the same problem there is there is a joke in the united states that if you if you owe the bank thousand dollars you can't pay to your problem if you owe the bank a million dollars and you can't pay is the bank's problem right so but why then europe isn't so happy about it's about the south stream project why isn't your bready ready to to to throw its weight have become one of the us as we get here in russia is it because the ukraine is lobbying against this russian project. not

aware of any particular ukrainian lobbying on that score but i suppose it could be true i don't know. i'm just not a position where i would know about that but i think the main reason is normally when we look at increasing your security one of the simplest ways to do it is increase the diversity of your sources of supply and that can mean diversifying the routes from the same supplier because sometimes there is an interruption of a single route but the supplier will be perfectly happy to supply from another route but it's also diversifying your suppliers and there's a whole host of countries in that southern area that are potential suppliers of gas to europe. particularly the caspian states but also countries like iraq in the future could be potential so there is a european idea of developing what they call the southern corridor and the i.a.e.a. looks favorably on that but that doesn't necessarily have to come at the expense of

other other projects we we don't endorse any particular commercial projects but we do look at diversification in the southern corridor which is an important opportunity for europe to diversify. i think that's why they're looking at it but to put it into perspective in this golden age of gas study that you you mentioned we see basically an increment in european import demand because their production is declining even though their demand isn't growing very rapidly there import demand will grow on the order of two hundred twenty billion cubic metres per year. over the next twenty years that to put it in perspective that's equivalent to about six pipeline projects maybe a dozen large elegy plants so there's plenty of room eventually for all the projects we're talking about today is just a question of the timing i was the ambassador american ambassador in kazakhstan when we were working a buck and that's what i tried to explain to people there that you know it was not

directed against an expansion of of the c.p.c. line. to i told people that will eventually have both and here it is eleven years later and we have the baku jape pipeline and the c.p.c. expansions been it been approved so i was right and i think that's what will happen to the gas here in the future thank you very much for being with us was a pleasure having you on the show and just to remind you that my guest today was richard jeni stepanek exactly director of international tennis. and that's it for now from all of us here if you want to have your say as well maybe you have someone in mind he is think i couldn't see you next time just drop me a line at. our union and that's the spot light into the. back with more comments on what's going on in and outside russia until then our team and. thank you ladies.

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